Could a Red Wave Cool Off the Retail Bullion Market?

Americans will vote in the midterm elections next Tuesday. The latest polling suggests that a “red wave” is building, and Republicans may win the majority both in the House and the Senate. The election results will have implications for all markets – and that includes precious metals.

Mass psychology is one factor. Confidence in U.S. institutions has been in decline for several decades. However, when we see a marginal restoration of confidence, it can impact physical market demand for bullion.

Accordingly, should Republicans win big next week, red-hot bullion demand could cool off for a period of time.

If the red wave fails to materialize, however, that could be viewed as confirmation the country will continue barreling down the wrong track. In that event, it is safe to say bullion investors will be inclined to keep stacking gold and silver more than ever.

It is less certain as to exactly how much confidence they will get from a Republican Congress. It's all about expectations and whether politicians immediately start walking the talk.

There are some things a new Congress can do. One of the first battles will be over the federal budget and the debt ceiling. Americans will find out pretty quickly whether enough genuine conservatives are in position to actually hold the line on deficits and debt.